Craft beer, as an overlapping circle on a dizzying Ven diagram of the “maker movement,” holds many of the same values that we’ve seen in other industries, like fashion, food and furniture. The people in this culture value locally produced, high quality goods that are unique and beautiful. But there’s a key difference in craft beer that makes it both highly successful as a trending consumer product, and challenged as an industry — that is, anyone can make "better beer," but it takes someone special to make you care.
Craft beer, like any other consumer movement, started with a group of passionate prosumers who wanted more out of their market. But these weren’t just aficionados These were contributors. To get what they wanted, they either made their own beer or travelled extensively to secure the best of what the world had to offer. Many breweries that began in the late 80s and early 90s were founded by men who were stationed on military bases in Europe where they experienced incredible and rare Belgian beers that inspired them. Returning to the states, they had a choice. Drink watery, yellow fizz. Or, start making beer.
Meanwhile, President Carter passed laws enabling the average American to start homebrewing again, and an entirely new wave of nerdy basement dwellers got busy cooking. These people formed homebrew groups, shared recipes and essentially removed themselves from the mass market as beer consumers. This was a serious DIY culture.
Out of this confluence of passionate consumers-turned-makers, dozens of small breweries were born, such as Sprecher in Milwaukee, and Boulevard in Kansas City. And that was just the early arc of a much longer story.
AN INDUSTRY, NOT A NICHE
Craft beer, built on the backs of hombrewers-turned-entrepreneurs, has always been part of a swell rather than a succession like many other niche trends and craft movements. This wasn’t about replacing the leather wallet you got at J.Crew with a better leather wallet you bought from a hipster in Brooklyn at a higher price. Craft beer was a fundamentally different product. All the markers of “craft” in the larger sense (made local, better quality, personal) were all necessary assumptions in the production of the product, not mission statements or differentiators.
Small breweries have limited distribution range. They can’t ship it or sell it on the internet. It’s better quality by definition because it’s using better ingredients, making smaller batches, controlling the product from start to finish, and making room for experimentation And it’s personal, not because that’s a marketing advantage (have you seen most of these guys?), but because brewers were also the owners, and there was no money to hire faces that weren’t also hands.
But beer is an industrial product in America. In our lifetimes, it’s always been produced at scale. So while craft beer may have similarities in the artisan realm, it’s rare that it’s ever thought of that way. The discussion is always “how many barrels are you producing” and “how far are you distributing.” No one’s asking people who make their own cheese or hand-made scarves these types of questions. This perception has a lasting effect on the market in terms of what a brewery is and should be. It shapes minds and business plans.
The result is that it’s taken a long time for beer as a craft movement to rein in expectations and make room for small, even tiny ventures that aren’t focused on growth alone.
THIS TOO SHALL PASS
When the bubble bursts on craft beer, as so many people are now predicting, it’s not going to be so obvious. It’s true that grocery stores like Jewel, and even smaller format liquor stores, are literally out of shelf space for new beer brands. But that’s like saying that there’s literally no room on an iPhone for another app. Competition has a way of weeding out the weaker players and replacing it with new hotness. If you told me there’d be another Words for Friends-like game so popular it’d bring down Apple’s Game Center, I’d have laughed. But here’s Letterpress killing it simply by upping the ante on aesthetics, interaction and game dynamics. In other words, just because shelf space is limited doesn’t mean it can’t be disrupted, or offerings re-imagined.
The bigger problem for beer competition is an historical one. While a few laws have changed to protect smaller breweries and diversify distribution models, the game largely remains unchanged. Big beer dominates and makes most of the rules. That means that as long as craft breweries aim to take away market share from AB In-Bev and MillerCoors (which they are steadily doing) then those corporations are going to play the same cards they did decades ago — buy up, consolidate, eliminate.
We’re likely to retain a larger number of regional labels that we did in beers’ past. Certainly some will refuse to sell, choosing to battle it out over distribution channels, resources and talent. But many big names in craft are likely to continue falling under the knife. Goose Island, Terrapin, and minority stakes already in place for breweries like Widmer.
What’s encouraging is the diversifying of craft brewery ownership, and the self-organizing of the ecosystem that makes it more resilient to assault. Many craft breweries are now being started with investment, guidance and resource sharing from other small brewery startups that are only years, or months, ahead. Long-standing contract breweries are acting like incubators for brands still looking for space. And still others are scoping their plans for sustainability, focused on fortifying a small, defensible footprint instead.
MUTATION, NOT EVOLUTION
The breweries that are more susceptible to buyout are the ones founded on business models that most closely resemble their overtakers. These are breweries that looked to scale up and spread out, often reaching out to AB to obtain funding, distribution or production help before their time. This is how breweries like Sam Adam’s achieved their status, and it’s how others met their end.
The wave of breweries opening now have such diversified business models, such as planned scarcity, CSA subscriptions, growler-only distribution, and single barrel production, that they’re essentially mutating into different types of business altogether. They’re not breweries in that traditional, industrial American sense. This not only keeps them off the AB/Miller Coors radar, but also well out of reach. Like a veloceraptor, a corporation as large as AB In-Bev can only see prey when it tries to run away. These new breweries’ greatest threat is themselves.
So that brings us full circle. Craft beer is an industry, not a niche craft movement succeeding from the mainstream. Except that part of it now is, in order to defend itself and grow in unique ways that are both sustainable, but also greatly satisfying.
BRINGING IT HOME
We’ll continue to see the battle be fought on macro beer’s own terms and turf. There will be a few winners and many more losers. And as those losers pile up and fizzle out, there will be a lot of talk about the bubble bursting. But anyone who’s close to the pulse will see something more interesting happening. They’ll see weirder and riskier ventures attempted in the name of experimentation. Many of those ventures will also lose. But others will set new, exciting examples. And lastly, we’ll see a general fatigue from consumers in the market as they move on to the next trend (if indeed it was a simple distraction for them). No market can produce the 1000s of different beers we’re now producing and expect any average consumer to care much longer. This will also seem like a bubble bursting.
But I prefer to think of it a different way. I think of craft beer as part of a larger trend in America moving towards knowledgeable, mindful consumption around products that bring us together. With other maker movements, the culture survives off affluent or design/art-minded individuals willing to pay a lot more for the chance to own something outside the mainstream, and separate oneself from others who don’t get it. But for craft beer, it’s not beer geeks keeping the movement alive anymore — it’s a much larger audience of Americans that take pride in knowing who’s making their products, and why. It’s American’s paying $4 for a micro draft (barely more) because there’s a story, and a connection, to others. Because for enough Americans, it’s not whether or not you can make a better beer — it’s whether you can make it matter.